Evotixrevenue, acquisition & funding

Introduction hey folks my guest today is matt ellison he is the ceo of evotex which is transforming how companies manage health safety and risk and engage with their employees delivering safe nurturing and compliant workplaces matt you ready to take us to the top i am yep okay so first off how do you get into this space do you have a horror story or something that you want to share uh well it was really uh i suppose more by chance uh i'd been an interim uh chief exec and uh we saw the business that i was running and the the partners in the fund said what next i said well i've always been on the lookout for business to buy without super actively searching and they said well take a look at as it was at the time she software and so i bought it for the proverbial a dollar because it was very much a turnaround so i came to it without any background in ehs but of course uh over over time have absolutely become sort of embedded in in the business and we're very much a purpose-led business so how can it be acceptable that uh in european and north american workplaces we're still killing 5 000 people a year and it's mostly from causes which are well understood and easily preventable and we're exporting most of that risk uh to the least advantaged in society uh the kind of gig economy employees people who are on insecure contracts so you know we're very much purpose-led uh driving uh that revolution uh improvement in workplace safety and so sorry just be clear if there's a someone listening right now running a 200 person company how would they use you at their uh inside their own company would they be serving up surveys to get sent employee sentiment sort of stuff is that what this is uh so if you're responsible for health and safety there's a bunch of stuff you need to do you need to record and investigate your incidents follow through the actions you don't understand your risk put the mitigations in place make sure your people are trained etc lots of companies in our target space still doing that with pen and paper and excel spreadsheets obviously very inefficient uh you can't learn anything from your data you can't demonstrate your compliance um but for us the key to it is about employee engagement so we're about embedding uh safety in the day-to-day activity and the data they think of the employees so we're mobile first uh we're very very focused on having a very strong kind of ui easy to use very intuitive and getting employees engaged in that that safety activity as part of their day-to-day i see i see okay so how many how many companies do Currently serving 450 customers you have paying for your platform today uh we're kind of between four or five hundred okay got it okay that's a lot and so how many when you look at all the employees they have assigned to the company how many total employees are on the platform uh north 50 million oh wow okay interesting so so the average size there what it's 2 million divided by 450 is what like a wait that's huge 4 000 people on the team on average yeah so um our kind of sweet spot uh we're working with with typically businesses maybe 500 up to 10 000 employees uh sometimes larger uh if if they're kind of um their operations are um you know very kind of coherent and similar so for example network rail big uk uh business hundred thousand employees uh so that all of their employees will be using our platform well that'll pull your average up obviously so that makes sense um tell me more about the back story here matt when did you launch the company well i bought the business uh back in 2011 as well this was she software you rebranded it it was she software i rebranded it exactly so we we rebranded we've rebranded uh last october i see got it got it okay got it because i remembered i remember the she software story but so the idea was the same thing so you put a dollar and that's amazing okay so you put a dollar in you buy the thing you rebranded it so when sorry when was she software launched uh she software originally 1995. so it had been through several ownerships when i acquired it oh what's going on there youtube good to see you guys now imagine this you love watching these interviews with sas founders but imagine if we took all of the valuation data out from over 2807 interviews i've done manually saves you a lot of time well we've done this we've built it into the beautiful interface inside of founder path check this out i'll show you how you can access this in a second but you log in you connect your stripe account you see your valuation real time you can see what it changed over the past 88 days and even set goals for valuation this year now the secret evaluation is there's many different ways to value a sas business so the reason you're going to see three or four different valuations inside of your frowner path dashboard this is all free by the way is because depending on who's doing the buying of your sas company you're going to get a different valuation a vc is going to pay a different valuation private equity firm is different if you're going to do a minority sale that's different and if you sell the whole business that's a different valuation you can see all those when i hover over here right so the teal is what a vc would pay yellow is what private equity and red is if you sold the whole thing outright now what's cool about this is this is not built off random data again you guys hear these interviews on youtube all these datas are built from real-time valuation data points founders share with us on the show so traction 1.2 million seed round 3.7 raised they sold 22 percent of their business go in here and filter by the event maybe you only want to see companies that have sold the whole business well here are a bunch that have been acquired the valuation and the multiple maybe you're going out right now and you're raising your seed round well go in here and look at all this recent seed deals that went down what they raised what valuation they raised at and what percent that they sold there's never been a larger data set of sas valuations than what you can get now inside of founder founderpath and we're thrilled to bring it to you all right we're gonna go back to the youtube video here in a second but if you want to check this tool out if you want to jump in and sign up you can check it out for free to get your valuation at this link this link founderpath.com forward slash products forward slash evaluations or if you go to founderpath.com and hover over products click on get your valuation here and go ahead and sign up to give it a whirl again all that valuation data live right inside the platform i hope to see you there all right let's jump back into the interview wow okay um 1995. okay and people always say like when i tweet out you know go buy a company for under a thousand bucks you'll go nathan that's not possible but you've also done it i bought a chrome extension for a thousand bucks and it did well you bought this for a dollar the proverbial dollar how did you negotiate that deal does she software have any revenue uh yeah well it already had uh 200 customers uh the problem was that it was in commercial disputes with its largest customer which was the revenues and so uh the fund was near end of life uh the they needed to be rid of the company and uh nobody else wanted to take on that risk well i love this guess if you're listening you should reverse engineer a playbook right so go look for portfolio companies inside of funds that are near end of life matt how can people find funds that are near end of life uh well i'm not sure that i'm i'm experts in that i guess you need to network around around the industry uh this one this particular fund was a secondary fund so what they've done is they bought a whole stack of assets uh from a distressed purchase and they were trying to work through them and uh figure out what they were doing with them can you name who it was so we can find other examples well the the fund was a collar capital fund and it was managed by nova caller capital manager called nova yep yep sorry how do you spell color how do you spell color uh c-o-l-a-r caller capital managed by nova yeah but again this is back in 2011 so who knows well it's still okay i think the lesson is still valuable right i mean you could do this with vc funds today on five year 10-year life go look at the early investments that still be chugging along but aren't breakout successes their potential you know this pension will win there so you buy this for a dollar you're now growing it now what are customers paying on average for the tool today uh pretty average ar 25 000 or so okay that's what each one's paying per year yep yep okay wow and and is that is that average annual contract value much higher than when you bought it have you expanded it for sure i mean when i bought it the average was maybe two thousand dollars and what year was that again sorry 2011 2011 you bought it and it was sorry twenty thousand two thousand two thousand dollars uh i'll put 200 customers yeah wow okay yeah so you've really wow that i mean that's a massive expansion is it the same customers who are paying 200 now paying 25 000 sort of per year or you had to replace them well a few i mean we've we've we've worked through the customer i mean there were some uneconomic customers clearly when i when i acquired the business and so we very much focused on the customers that we thought could kind of draw true value from the from the solution and fast accordingly so just be clear when you bought it there are 200 customers paying 200 per year to 200 paying 2 000 a year oh two thousand per year okay okay yeah yeah yeah yes i mean you bought this bad boy then with i mean this this isn't small revenue i mean you were without i think was doing 400 000 dollars a year right yeah but because you because you handled the risk and everything you're able to get it you know financially emotionally it was a big toll but well we were being we were being sued for 11 million dollars by by our largest customer okay so how did you settle that or did that suit go out with you at being the new owner well we sued them uh and then it went to a mediation and we faced them down across the table and uh they paid us three hundred thousand dollars which kept their business up that's like a seed round yeah yeah exactly but no equity great i've i love this story okay this is amazing got it so so you sued for 11 million now now this was your biggest customer that just weren't paying or something uh well they they had taken our solution and then developed their own software either arguably taking the ip and certainly breaking the contract oh i see so you want a 3000 settlement which you could then reinvest in the business do whatever you wanted to do with now you've got 450 customers paying Monthly recurring revenue on average 25 000 per year right yep which so i mean can we do the math on that 450 customers paying 25 000 per year i mean it's like 11 million business uh yeah bit null says that wow that's impressive that's super impressive where did you learn how to do this did you have a software company before this no i was um honestly i was completely fresh to software uh i could have i've had a varied background i suppose i've done consulting i've done i've been in various executive roles and i backed myself to know how to how to kind of manage a team grow a business and um taken a lot of external advice you know kind of studied read a lot listened a lot and uh yeah taking it from there this thing i just guys don't you get jazzed up listening to founders like matt matt i just love this story unconventional you know very scrappy a lot of grow i mean a lot of growth this is great you're bigger than many of your Bootstrapped bc bank competitors now have you raised external capital outside of your own oh no for sure yeah we've we've done uh we've done a round and b round now so we've got about 10 million of external capital okay well you're a little less sexy than in my eyes but you're still yeah i know i i know you like the bootstrap yeah yeah you've listened to a couple episodes now you know the drill yeah but but you know we're with uh at least we're about you know more than uh more than a one for one um kind of uh funds raised to to a lot of achievement he knows my next question before i even ask it that's impressive that's impressive yeah so you've raised 10 but you're at 12 million are which i love very capital well wait wait wait more than more than 12 minutes oh more than 12. yeah that's amazing okay um break down the rounds for me when when was the a and the b uh so a was 2018 b was 20 20. um we're still living off that capital um you know we've got decent runway we're sort of we're still burning a little but but we're we're moving pretty rapidly towards break even so how much was that series b series b was five five million okay and sorry how much was that in the series a was also five well series a was two stages so it was uh three and then three again okay got it that second three closed in 2018. uh the first three close 2018 second three close to 2019 and then 2020. very interesting now looking back at those rounds did you do those again did you really need that money was the equity delusion worth it uh it was yes because um you know we we are the lead player in in uh emea oh it's in the uk and ireland uh and at some point you know we were going to be constrained in our growth uh and so the round was very much to enter the north american market and you know for the european small european company going into north america where you don't do that lightly so i understood that that was going to need a significant investment and we needed the capital um but the other thing is that uh you know as i said you know we're we're always interested to kind of take the best advice and best external resources and uh our investors have been fantastic in terms of their ability to you know they've been there seen that done this and so the advice that i get uh at the board and from the operating partners is fantastic well give them some love who are they yeah so around uh mercia be round four capital broad capital folk f-r-o-g fog frog frog capital okay interesting um and i guess let's go back to the a real quick most folks are selling obviously you know like you know 10 to 15 in their a were you sort of in that same range uh yeah i think a little bit higher than that okay so you would have been like a 50 million valuation 40 45 50 million evaluations something like that well at the time lower no no there's a low evaluation yeah yeah you know we've been going fast so like so the valuation i think on the a might have been 12 million and maybe we're now sort of a hundred north of 100 million well sorry just to be clear when you did this series and race you raised six million there three three million twice right well three and three right but but not all of the same valuation oh so the second three was at a higher than a 12 million bucks yeah exactly i see i see yeah that second that second three hopefully was at like 25 30 million or something yeah yeah exactly so you know i think you're probably possibly your next question i don't know but i'm i'm still the largest shareholder but slightly below majority i love that i love that and just be clear that series b you guys were at north of 100 million it was priced or you think now you're more than 100 now we're north of 100 yeah i mean subject of course to where we are in the markets at the moment of course so series b was like 50 60 million something like that yeah no yes something like that yeah right around there fair enough very cool okay i love this story and again just be clear so you still own individually the most but a little less than 50 which is great so you're doing this in a very capital efficient way this growth those stories incredible how are you i have to i mean how are you growing so fast how did you double your customer account where are you finding customers uh so we're we're direct sales um so we we have a kind of a classic uh marketing function and then uh we have a bdr function um where we're developing those opportunities to the point where they're ready to be passed across to our bdm team and how many folks today full time are on the whole team uh across sales and marketing uh probably about 50. okay okay and how many sale how many on that sales team carry a quota uh so if you're talking new business quotas we'd have uh 11 quota carriers what about current like expansion targets on chrome yeah so then then we got it we got expansion we've got an expansion team um of currently uh three and so they have you give them like a million dollar book of business they have to drive it to 130 expansion or something yeah so uh what we found was we previously had just had a customer success function and what we found was that that we were picking up the smaller upsells but we weren't driving the big expansion deals and so i've got a team now who are more hunters who are where we're in the corner of a larger corporate uh they're proving very successful at working out to other divisions or other geographies okay so they're really your their goal is hey go hunt down opportunities for expansion not where you're increasing it by ten percent but where you're doubling the contract value by selling into a new division exactly exactly guys that's a big takeaway right so if you have cs reps don't you know challenge them make them go make them go double acv don't give 120 percent ndr target go make them double at ac on on a couple customers so nice tactic there and then go back macro 10 000 feet the whole team all together everyone at evo ticks uh yes so we're at about 150 150 okay you're getting up there man do you miss being down in the weeds in the product you have all the people's problems now yeah there is there is some of that for sure um you know there is a as you go from 50 to 150 it starts to change and um you know it's it's hard to know everybody individually but you know i think over time we built a super strong culture um town halls uh every two weeks um you know i i travel a lot i meet the the the folk and um you know so i think it's very important to maintain that very strong kind of culture that you build up uh as your value of startup um and it obviously adapted over time but you know that kind of glue is very much what uh what drives the business and real quick breakdown how long is the town hall every two weeks oh so that's just a half hour half hour and so i'll i'll give some quick updates and then i'll invite people around the business to to you know whatever whatever is a topical issue so what you break down that 30 minute agenda for me a quick update might sound like what okay so maybe there's five minutes where the customer success team talks about some some recent successes um i'll talk i'll talk about new joiners birthdays uh anniversaries um and you know generally celebrate success so we use uh we use a system called 15.5 where we we call out high fives and so you know normally there's some great high fives that reinforce our values which i can i can call out in that meeting if you want to learn about 15.5 what can they do about that is that performance management literally 155.com yeah 55.com uh so it's a it's like sort of an employee engagement and sort of temperature check so uh every employee does a weekly check-in uh and then for that weekly check-in the manager or the they have a one-to-one with their manager uh and that sort of helps to set the agenda so particularly with remote working it's important to to maintain those connections with your employees yep yep no totally agree very cool love this story here um let's just real quick on growth you're at 1.2 million ish right now in monthly revenue where were you exactly a year ago uh we've grown 43 in the last 12 months wow okay so you were like like 800 000 a month a year ago um do you remember the year the business broke a million in revenue uh probably 2014 i would think something like that okay so basically two year 2011 was when you bought it right and so it took you three years to take it from 400k up to the first million yeah yeah yeah okay interesting guys there's good a lot of good data in here matt let's wrap up here with the famous uh five number one a favorite business book uh so um i i like um uh the hard thing about hard things number two is there a ceo you're following or studying well actually i'm gonna switch that question at the moment i'm i'm following sequoia capital because i just think they provide some really great presentations um on uh particularly in the current environment how do you think about uh running your business and green number three what's your favorite online tool for building the business 155 i think i probably call out so that's been very very powerful for us and real quick i'm adding this question in what's something that you're curious about right now in terms of growing the business this aspect what are you thinking about um i mostly thinking about uh how do we get that kind of the right focus and getting products and engineering uh working together uh on i mean kind of powerful linking through for market through commercial through product through engineering and getting getting absolute coherence uh and focus on that interesting number four how many hours of sleep to get every night uh eight okay and that situation married single kids uh so i have a partner and uh one child one kiddo and how old are you uh i'm 56 56 last question something new wishing you when you were 20 um i i guess you know things come with time you don't need to you don't need to be in too much a hurry you just need to be persistent and and uh yeah confident in in your abilities and things will come to you guys she software was doing 400 000 in revenue back in 2011 when one of their biggest customers went and built their own product he said you know what i'll take this company over as we go sue them there's a lot of liability he bought it for a dollar in 2011. ultimately won that suit got a 300 000 kickback on that legally and then in 2014 the business broke a million bucks in revenue but what happened since then is incredible they're now over 12 million numbers of run rate they believe that creating a safe work environment is important they've built software to help you do that at evotics.com now again doing 1.2 million bucks a month in revenue up from 800 grand just a year ago they raised about 11 million bucks which i love that's less than their ar so very capital efficient as matt looks to continue to grow with this team of 150 folks matt thanks for taking us to the top great thanks nathan one more thing before you go we have a brand new show every thursday at 1 pm central it's called shark tank for sas we call it deal or bust one founder comes on three hungry buyers they try and do a deal live and the founder shares back end dashboards their expenses their revenue arpu cac ltv you name it they share it and the buyers try and make a deal live it is fun to watch every thursday 1 pm central additionally remember these recorded founder interviews go live we release them here on youtube every day at 2pm central to make sure you don't miss any of that make sure you click the subscribe button below here on youtube the big red button and then click the little bell notification to make sure you get notifications when we do go live i wouldn't want you to miss breaking news in the sas world whether it's an acquisition a big fundraise a big sale a big profitability statement or something else i don't want you to miss it additionally if you want to take this conversation deeper and further we have by far the largest private slack community for b2b sas founders you want to get in there we've 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